Chapter 3

Designing the Approach

Moving from insight to value is more than just a glib statement. It represents a major shift in management philosophy. It’s also the difference between differentiation and mediocrity. This chapter focuses on five rules that, if followed, help keep organizations focused on value creation rather than just being smart.

THINK ABOUT COMPETENCIES, NOT FUNCTIONS

Business analytics is a competitive differentiator. Treat it as one.

Being better than the competition is the essence of competitive advantage. There are, however, limits to this. Trying to be everything to everyone is a recipe for disaster; there’s a reason Amazon and Wal-Mart have different business models.

Competitive differentiation comes from specialization. Specialization comes at a cost: It requires deep skills, time, and investments that carry heavy sunk costs. However, it’s hard if not impossible to differentiate by being a generalist. A big part of strategy is simply trying to work out where focus will drive the best return.

Although investment always carries risk, one of the biggest risks is that investing in specialization leads to skills that are rarely transferable. Having the infrastructure to support the world’s best supply chain is meaningless when it comes to driving one-to-one customer engagement. For most organizations, it’s a case of picking one, maybe two areas to specialize in and being okay everywhere else.

Business analytics turns this constraint on its head. Unlike ...

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